How do reimbursement models impact physicians’ trust?

Hrayr Attarian, MD, FACCP, FAASM is Professor of Neurology for Northwestern University Feinberg School of Medicine. He is also the Sleep Medicine Fellowship Director at the Circadian Rhythms and Sleep Research Lab.

As sub-specialization has increased in medicine, and as a multidisciplinary approach to individual patient care has become more prevalent, trust between healthcare providers is likely to become increasingly important in driving appropriate referrals. Imagine a primary care provider who needs the expertise of a specialist and has a pool of half a dozen from which to choose. This provider is more likely to refer a specialist that he or she trusts. Furthermore, to the extent this provider works with specialists that he or she trusts, greater productivity will likely result because less effort will be spent on the redundant activities of overseeing, double checking, and redoing one another’s work (1).

How might patient reimbursement methods play a role in building or undermining trust among physicians? Before going any further let us summarize the three main health care provider reimbursement methods available in the U.S. today:

The most prevalent method of reimbursement is fee-for-service (FFS). With the FFS model, healthcare providers are paid for each element of care they provide. This gives an incentive for providers to perform more tests and to provide more treatments because their payment is dependent not on quality but quantity of care.

Prospective payment (PP). This is the primary method with which U.S. Medicare reimburses for hospital care. With PP, healthcare providers are paid a predetermined, fixed amount for each service provided. The fixed fee is based on the diagnosis (and other variables) and does not take into consideration acuity or intensity of care in individual cases.

Pay-for-performance (P4P). This is the dominant method of payment in most developed nations and within some organizations in the U.S. With P4P, healthcare providers are paid in part based on meeting certain performance measures (such as quality of outcome), which are individualized by specialty.

Much has been written about the ethics and pros vs. cons of one form of these payment methods.

Exploring the three main reimbursement methods

The benefits of the FFS include: only services delivered are reimbursed and physician payment is not tied to patient compliance with treatment or recommendations. Also it is the model that preserves the most physician independence. On the downside, the FFS model entices physicians to do more testing and deliver more treatments as they get paid by quantity of care and not quality.

The benefits of the PP model include: costs are kept manageable and are predetermined before any intervention or testing has taken place. It also does not incentivize unnecessary testing. However, it may discourage even necessary testing or intervention over and beyond the payment cap.

Finally, the primary benefit of the P4P’s model is that it rewards quality of care rather than quantity. However, it can sacrifice physician independence and force certain guidelines to be applied in situations that may end up being harmful to the individual patient.

A recent study, however, utilized a mathematical model comparing FFS to PP and FFS to P4P. A transition from FFS to P4P showed a positive correlation between P4P and the ethics of physicians in both private practice and hospital and group practice. This finding hinges on the assumption that P4P results in improved patient health—a reasonable belief given that physicians under P4P are incentivized to provide better patient outcomes. In contrast, a transition from FFS to PP resulted in undermining of ethics especially among overworked general practitioners (2). This finding hinges on the assumption that doctors under PP believe that extra effort spent on their patients is likely to have limited effects—a reasonable assumption, especially for overworked general practitioners.

A majority of papers written on trust in the medical literature deal with patient-physician relationships and some papers have looked at trust between physicians and administrators. Much less research has been done on trust between healthcare providers.

What does this mean for trust?

Let us return to the primary care provider mentioned above, who needs the expertise of a specialist. Would a primary care provider’s trust in the specialist differ if the specialist is incentivized via FFS or P4P? In other words, would a provider have more confidence in someone whose professional goal is better healthcare for the patient rather than one who, very adroitly and with great skill, administers many diagnostic and therapeutic procedures?

Previous research has shown that trust between physicians can be undermined by poor communication, clinical knowledge gaps, and misunderstanding of core concepts (1). In addition to enhancing trust by improving on these dimensions, a transition to P4P might well improve inter-provider trust and result in overall better healthcare.